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If you can’t see the embedded video, watch about the long term effects of forclosures here.
Hi. My name is Joel Gurman with Quicken Loans and a question has been asked a lot about foreclosure and the effects that it has on people long term. When you talk about foreclosure it’s something that has got to be a last resort. Banks are really willing to work with folks that are in situations where maybe they’ve lost a job and it’s hard to make payments. They don’t want to foreclose on you, so you want to do everything you can to avoid it.
Now the big issue is, moving forward what is a foreclosure going to do to you. I don’t think anybody really knows the long-term repercussions of it. Make no mistake, it’s going to have a negative effect on your ability to get future financing. Whether that’s the next house you want to buy, whether that’s the car you’re going to need a year or two down the line, whether that’s you co-signing for kids in three, four or five years for their student loans – it’s going to have an impact. And you have to take that stuff into consideration.
The other thing to really look at is the impact that it has on the people that you’re around all the time. If your house goes up for foreclosure it’s going to affect your neighbors. So again, it’s got to be a last resort. I do realize in today’s economy there are people who run into situations where they can’t make their payments but you have to think it through. A very wise man told me one time: What’s easy to do in the beginning is tough to live with in the end. Even if you can make a few extra payments or if you can forgo a few other things – it will behoove you to make your payments on your mortgage and not go into foreclosure. Because again, we really don’t know the implications of a foreclosure or of a short sale where you’re giving away the equity in your property.
If you can do anything – make your payments. Stay in your house & work with your lender but avoid foreclosure because it’s going to be bad to start with and who knows where it goes from there.
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